On March 26, 2026, President Trump issued a new Executive Order entitled Addressing DEI Discrimination by Federal Contractors, reinforcing the Administration’s approach to diversity, equity, and inclusion programs. The Order declares it the policy of the United States to promote economy and efficiency in federal procurement by prohibiting “racially discriminatory DEI activities,” which it characterizes as practices that treat individuals differently based on race or ethnicity rather than merit. Invoking the Federal Property and Administrative Services Act, the Order asserts that such practices increase costs, reduce efficiency, and expose the federal government to waste by limiting labor and supplier pools and undermining collaboration and performance.
The Order provides a detailed definition of “racially discriminatory DEI activities,” encompassing disparate treatment based on race or ethnicity in hiring, promotion, contracting, vendor selection, training, mentoring, leadership development, and other programs or opportunities sponsored by contractors or subcontractors. Within 30 days, federal agencies must ensure that all covered contracts and subcontracts include a mandatory clause prohibiting these activities, requiring contractors to provide access to records to demonstrate compliance, and obligating prime contractors to report known or reasonably knowable violations by subcontractors. The Federal Acquisition Regulatory Council is directed to amend the Federal Acquisition Regulation to implement these requirements and eliminate conflicting provisions.
The enforcement mechanisms in the Order are notable. Contracting agencies are authorized to cancel, suspend, or terminate contracts and to pursue suspension or debarment of noncompliant contractors. In addition, the Attorney General is directed to prioritize potential enforcement under the False Claims Act for violations of the new contractual prohibitions, increasing potential exposure to civil penalties, treble damages, and whistleblower actions. Federal contractors and subcontractors should promptly review existing DEI-related policies, programs, and documentation, assess subcontractor oversight and compliance, and prepare for heightened scrutiny as agencies begin implementing the Order and associated regulatory changes.
Access a fact sheet issued by the White House here for more information.